The Pension Schemes Act 2021 will allow people’s statutory right to transfer from their pension scheme to be restricted where there are signs of a pension scam.
Regulations will be developed by DWP and are expected to be in place later this year, according to the committee.
Under these plans, pension scheme trustees will be required to check if a transfer showed signs of a pension scam before allowing it to take place.
The committee has now recommended that a review should be published within 18 months of the regulations being operational, and if there are any concerns about the operation of the policy this will allow legislative changes to be made during this parliament.
The new regulations will identify potential indicators of a pension scam which would raise either red or amber flags.
A red flag would allow a transfer to be blocked and an amber flag would allow a transfer to be paused until a person has received appropriate guidance.
The committee said any firm appearing on the Financial Conduct Authority's warning list should constitute a red flag.
The FCA hosts a warning list which publishes details of unregulated firms which appear to be carrying out an FCA regulated activity without authorisation or permissions.
It said: “If this is not possible, then the red flags developed by DWP should be defined in such a way that any firm or individual appearing on the FCA warning list would trigger a red flag.”
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